New Dawn for VC Fundraising as Small Funds Rule

Venture capital fundraising is on the upswing in the United States thanks to a third-quarter surge in the number of micro-funds (less than $50 million), new data released today by PitchBook show.

Thirty-six venture capital funds closed in the third quarter this year compared to 33 in 2Q, 20 in 1Q and 17 in the fourth quarter last year, reflecting a healthier fundraising environment for venture capital in 2013, which has seen VC firms raise $11.1 billion across 89 vehicles. Twenty-four of the 36 third quarter funds were so-called micro-funds that raised a collective $350 million—a small sum to be sure. Still, seven funds closed in the more mid-range $100 million to $250 million bucket last quarter, and for the first time since 3Q 2012 the VC industry saw the close of a mega-fund—Greylock Partners’ $1.1 billion fund XIV.

While billion-dollar VC funds are rare, the seven-quarter period from 1Q 2011 to 3Q 2012 featured at least one mega-fund per quarter, with the last one prior to Greylock’s recent vehicle being New Enterprise Associates’ $2.6 billion Fund 14.